Commenting on the Trading Update, Kevin Lomax, Executive Chairman, Misys, said:

“We are encouraged by our performance for the full year: the momentum achieved in the first half has been maintained. This performance reflects some improvement in trading conditions but in particular the benefit of the actions we have taken. We continue to invest across our product range and to reposition Misys for growth. It has been a year of real progress and this gives us confidence for the future.”

 

*     Adjusted basic EPS is calculated pre goodwill amortisation and is based on an average number of shares in issue of 499m.

**    Where like for like data is provided, it is at constant exchange rates and excludes non comparable periods in respect of acquisitions and disposals.

The Company’s performance in the year has been encouraging, demonstrating that the momentum achieved in the first half has been maintained. This performance reflects some improvement in trading conditions but in particular the benefit of our increased investment across our business as we continue to expand our development capabilities and enhance product functionality. We are continuing to implement the strategies we put in place to reposition our business for organic growth. Clearly, sustained successful execution remains essential. However, we regard the last year as one of real progress, which gives us confidence for the future.

On a like for like basis (see note 1) total revenues were up 7%. On a reported basis revenues were up 2%. Operating margins on a reported basis are expected to increase to around 18%, up from 16% in the prior year.

Like for like Initial Licence Fee (ILF) order intake increased by 16%. This reflects a satisfactory overall performance in treasury and capital markets and strong performances across wholesale, risk and retail. The closing ILF order book was £31m, up 18% on the prior year.

Like for like ILF revenues were up 13%. Maintenance revenues were up 2%, like for like, once again demonstrating the long term stability of our large customer base.

As previously indicated, protracted negotiation especially in the larger contracts is now a feature of the market, making it more difficult to predict when deals which have been awarded will be signed. While in the first half a number of deals slipped beyond the period end, the second half performance reflected the signing of a number of large deals.

Professional Services revenues rose by 12%, like for like, over the prior year. Whilst we saw strong growth in the first half, growth in the second half was slower than we had anticipated. This was due to a number of contracts with both ILF and large Professional Services content being signed later than expected in the second half and therefore implementation being delayed. We are however encouraged by the strength of the Professional Services backlog.

With effect from 1 June 2005, we have created a new business, Treasury and Capital Markets, by combining three of our major products groups, Summit, Misys OPICS and MisysIQ. This business, led from New York, brings together our proven expertise and world class products in a single operation, enabling Misys to accelerate product development and enhance customer service. The new entity is one of the largest suppliers of treasury and capital markets systems.

(note 1):   In order to make a like for like comparison of the results we have excluded from the prior (comparator) period the asset management and securities trading businesses sold in late calendar 2003 and from the current year, the non comparable periods from MisysIQ, acquired in January 2004, and IDOM acquired in August 2004, and the effects of exchange rate movements.

On a like for like basis (see note 2) total revenues were up 6%. On a reported basis they were down 1% due to further adverse movement in exchange rates.  As expected the additional investment in Misys EMR and the final phase of the investment in Misys CPR totalled $10m compared with $4m (Misys CPR only) in the prior year.  The underlying operating margins before these additional investments are expected to be slightly ahead of last year but on a reported basis, after these investments, operating margins will be slightly below last year.

Like for like ILF order intake increased by 7%, reflecting in particular continued strong demand for our electronic medical record (EMR) offering. Like for like ILF revenues were up 5%, despite being flat in the first half.  This was mainly a result of more timely conversion of EMR orders to revenue compared with the first half. As a consequence, the closing ILF order book was £29m, 5% below the prior year.

As we have previously indicated, Professional Services are becoming more significant in our sales mix as the shift in demand to clinical products such as Misys EMR and Misys CPR continues. This has resulted in like for like total order intake growth increasing at a more significant rate than the growth seen in like for like ILF order intake.  In addition, like for like Professional Services revenues grew by 10%. Given the momentum seen in Professional Services order intake during the year we expect revenue in future periods to benefit from this backlog.

(note 2):   In order to make a like for like comparison of the results we have excluded the effects of exchange rate movements, and any contribution from Misys CPR, acquired in July 2003, for the first two months of the year.

This market leading business continued to perform strongly. Reported revenues grew by 8% driven by new product offerings attracting larger new name customers. Operating margins are expected to be in line with last year.

Reported revenues in Sesame were 5% lower than the prior year with profits in line with expectations. The business saw an increase in the number of RIs, with growth in its non-regulated network, Sesame Direct, being particularly strong driven by demand for mortgage and general insurance offerings. Sesame is actively working with the Financial Services Authority (FSA) to gain approval for its multi-tie proposition, and it is expected to be launched in the near future.  

While we expect Sesame to make good progress in the future, operating profit in the current year is unlikely to exceed that achieved in the year ended 31 May 2005. This is primarily due to Sesame’s multi-tie offering having not yet been launched and the continued investment in its compliance procedures.

It is Misys’ stated intention to divest the Sesame business. To assist in this process, Lexicon Partners, the specialist corporate finance firm, have been appointed to undertake preparatory work. At the time of our interim results in January 2005 we commented that we expect divestment to take place within 12-18 months, and our expectations remain unchanged.

The underlying tax rate is expected to be an effective rate on profit before taxation and goodwill amortisation of no more than 15%.

Net interest payable for the full year was, as expected, well ahead of the prior year at between £10m and £11m due to higher prevailing interest rates and higher average net debt. Current market expectations are for a significant increase in US$ interest rates which if they materialise will result in an interest charge for the coming year in the region of £15m.

Group costs will no longer benefit from the profits on sale of the WebMD warrants, as the last tranche of these was recently disposed of for a £3m profit.

A conference call for analysts and investors, chaired by Kevin Lomax, Executive Chairman will be held at 09.00hrs today. To access this call dial +44 (0) 1296 480 180; Passcode 466827. The call will be available for replay on +44 (0) 1296 618 700; Passcode 531756 until 10.00hrs UK time on 12 July 2005.

 

	AS REPORTED				LIKE FOR LIKE
	FY: 2004	FY 2005			FY:2005
	£m	% Change	£m		% Change	£m
REVENUE
Group total	899.9	(1%)			2%
Banking	240.2	2%			7%
Healthcare	293.6	(1%)			6%
General Insurance	31.2	8%			8%
Sesame	334.9	(5%)			(5%)
Group operating margin	11%	around 11%
Tax rate		No more than 15%

	AS REPORTED					LIKE FOR LIKE
	FY: 2004	FY 2005			FY:2005
	£m	% Change	£m		% Change			£m
REVENUE
Total revenue	240.2	2%				7%
Initial Licence Fees (ILF)	64.5	12%				13%
Professional Services	45.2	6%				12%
Maintenance	118.7	(3%)				2%
ILF order intake	67	15%	77			16%	76
Closing ILF order book	27	17%	31			18%	31
Operating margin	16%	around 18%

	AS REPORTED					LIKE FOR LIKE
	FY: 2004	FY 2005			FY:2005
	£m	% Change	£m		% Change			£m
REVENUE
Total revenue	293.6	(1%)				6%
Initial Licence Fees (ILF)	57.7	(2%)				5%
Maintenance	107.9	1%				7%
Professional Services	28.0	6%				10%
Transaction Processing	71.1	(8%)				(1%)
ILF order intake	52	6%	55			7%	56
Closing ILF order book	31	(4%)	29			(5%)	29
Operating margin	15%	slightly below last year
CPR/EMR incremental investment	3		6

	AS REPORTED
	FY: 2004	FY: 2005
	£m	% Change
Revenue	31.2	8%
Operating margins in line with last year

	AS REPORTED
	FY: 2004	FY: 2005
	£m	% Change
Revenue	334.9	(5%)
Trading in line with expectations

				Closing number of RIs
	Average number of RIs			31 May 2004	30 November 2004	31 May 2005
	FY: 2004	FY: 2005
Network	5,000	5,050		5,000	5,200	5,050
Sesame Direct	1,300	2,350		1,550	2,400	3,100
Total	6,300	7,400		6,550	7,600	8,150

	At 31 May 2004			At 31 May 2005
	Closing	Average		Closing	Average
US Dollar	1.8329	1.7264		1.8229	1.8586
Euro	1.5004	1.4515		1.4762	1.4618

Enquiries:

Susan Cottam, Group Communications DirectorTel:   +44 (0) 20 7368 2305
Mob: +44 (0) 7957 807 721

Andrew Farmer, Head of Investor RelationsTel:   +44 (0) 20 7368 2307
Mob: +44 (0) 7909 895 094

About Misys plcMisys plc (FTSE: MSY), the global software company, is one of the world’s largest and longest-established providers of industry-specific software. Founded in 1979, Misys serves the international banking and healthcare industries and the UK general insurance industry, combining technological expertise with in-depth understanding of customers’ markets and operational needs. In banking it is one of the top four software providers worldwide and the largest outside the US, with over 1,200 customers, including 90% of the world’s top 50 banks. In healthcare it is a top five software provider in the US market, serving more than 92,000 physicians in 18,000 practice locations, 1,250 hospitals and 600 home care providers. In UK general insurance it is the market leader in software solutions. Through Sesame, a wholly-owned subsidiary, it is also a leading provider of support services to over 8,000 financial advisers in the UK. Misys employs over 6000 people internationally and has customers in over 120 countries. For more information, visit www.misys.com